Corporate Watch : August 08, 2012 : Lack of supporting evidence does nothing to stop outsourcing boom

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It’s been a tough time for public sector outsourcing’s reputation recently. The procedural cruelty of French company Atos’s work capability assessments was exposed by, not one, but two TV documentaries last week. A couple of weeks before, Serco’s handling of the out-of-hours GP service in Cornwall had been ripped apart by the Care Quality Commission. And before that, G4S, the biggest of them all, had shown its bungling (rather than its brutal) side to the world with ineptitude on an Olympic scale.

But then came the news last Wednesday that Circle Health had “turned around” Cambridge’s Hinchingbrooke hospital in only six months. What better way to show the wonders of privatisation than to celebrate its achievements improving the NHS?

Circle boss Ali Parsa said his company, which took over Hinchingbrooke in February, had “already seen big improvements across the hospital”, pointing to high patient approval ratings, and its accident and emergency department becoming the "top performing full service trust among all hospitals in the Midlands and East of England region".

This was contrasted to the pre-Circle Hinchingbrooke, which Junior Health Minister Frederick Howe described as “a clinical and financial basket case”, and which many newspapers described as “a failing general hospital”.

That’s a compelling narrative. Writing in the Daily Telegraph, Sean Worth, a former Cameron SPAD, now working at the rightwing think tank Policy Exchange, celebrated a “revolution on the wards that could heal our public services” by “ending the curse of state monopolies”.

But in truth it is really too early to tell how testable, significant or lasting these purported achievements may be. While the achievements listed in Circle’s press release sounded impressive, there was no context to them and no references were given.

Corporate Watch asked Circle and NHS East of England for details of Hinchingbrooke’s performance before Circle took over but have not heard anything back.

However other available information shows Hinchingbrooke’s clinical problems before Circle and its tax haven-domiciled hedge fund backers came to save it have been exaggerated.

The Care Quality Commission’s inspection of the hospital in September 2011 – just four months before Circle took over – for example, noted improvements were needed but gave the, not exactly damning, overall verdict:

“The majority of people we spoke with told us that they were happy with the care they had received and felt informed and consulted about their treatment options. People also told us that staff were good and would do their best to meet individual needs. People told us that they were treated with respect and dignity and we also observed this throughout our visit”.

In January 2012, one month before Circle took over, the hospital had been ranked second for “patient experience in east of England” and it had previously been ranked in the top 40 hospitals in the UK in May 2011 by a survey organised by a subsidiary of Capita, that well known apologist for public sector inefficiency. And as Richard Blogger has pointed out, Hinchingbrooke’s key indicators before Circle took over were also good.

So Hinchingbrooke was hardly the clinical basket case of Lord Howe’s imagination. Its main problems were financial, mainly a PFI-induced deficit.

Yet Circle had little to say last week about the efficiencies its corporate expertise had brought to the hospital’s books; understandable given the Hinchingbrooke Trust’s financial report for June says it has not met the overall targets in the first quarter of the financial year for its deficit reduction plan - a deficit of £2.3 million is £652,000 more than the targets in the plan - and warns “any risk of further slippage” on the cost improvement programme will reduce its cash balance to an “even more critical level”. It goes on to suggest the Trust “may need to consider what access it has to loans and other cash injections”.

Circle’s management may not, therefore, have been the financial panacea its recent claims – including Ali Parsa’s boast to have saved £1.6m on paper procurement - have suggested.

To be fair to Parsa, he was more circumspect in his judgement than many media commentators, noting: “You can never mark running a marathon after a few miles, and we know that there are many areas we still need to work on”.

That did not stop him going on to recommend the Circle-Hinchingbrooke model be extended more widely across the NHS. Parsa, perhaps with an eye on his company’s falling share price, also expressed his hope Circle would one day become as big as Capita and Serco.

He’ll be happy to know that the lack of evidence that such outsourcing giants can run public services properly continues to be no barrier to their success in winning contracts. Last week Capita was named as preferred bidder for Personal Independence Payment (PIP) assessments to replace the Disability Living Allowance in Wales and Central England (with Atos being selected for the other two contracts covering the rest of the UK). Serco, meanwhile, is in line to win contracts to run the coalition’s new National Citizen Service.